Hammond Manufacturing AGM (TSE:HMM.A)

Yesterday I attended the annual general meeting of Hammond Manufacturing Company (TSE:HMM.A) which is my largest stock market investment. It was my first time attending an AGM meeting for a public company I have invested in. The meeting was fairly small but the management was open and friendly and willing to answer any questions. This made me feel confident in continuing to be a shareholder in the company.

Hammond is my largest stock market investment as it ticks off many of the boxes of what I look for in an investment. It trades at a P/E ratio below 10 (currently about 7.8 based on comprehensive 2017 earnings). It trades at a discount to book value (currently over 40% discount). It is primarily a family owned and operated company with large insider holdings. Also lastly is pays a dividend (currently a fairly low rate of 0.8%). The only box this company does not tick is that it does not buy back it’s shares although this is fairly understandable given how small they are and how illiquid the shares are.

Some of the items brought up during the meeting are that the company is seeing cost increases in material prices but are very confident they will be able to increase product prices to match and so should be able to maintain margins. They said the company is seeing strong sales and is very busy trying to keep up which is good. The company will have a strong capex spend this year to grow production. Lastly the company says they are looking at future dividend increases as results are strong right now, but not any specifics on when that will be.

I believe Hammond is a small gem of a company and well run. I am happy to own the shares and may buy more in the future.

I disagree that the last earnings report was weak. On the surface the $0.33 Hammond earned in 2018 is lower than the $0.40 it earned in 2017, but the 2017 earnings included a foreign exchange gain and the 2018 earnings included a foreign exchange loss. Due to the fact that in the long run foreign exchange gains and losses net out to zero they should not be included when evaluating the true earnings of a company.